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Exactly four decades ago a bloody war was fought by Asian giant China and its neighbor Vietnam (then South Vietnam) over the control of the disputed Paracel Islands group, an archipelago in the South China Sea (SCS).

The 1974 Battle of the Paracel was won by China, which gained full control over the entire archipelago, but it set a bad precedent in the history of solving territorial disputes. Instead of pursuing a negotiated settlement, China opted for war in pursuit of its territorial claims in the SCS, an act which created fear, suspicion and uneasiness among not only its neighbors but also Southeast Asian countries.

Even after 40 years of China's control over the Paracel Islands, which were incorporated into Hainan province by Beijing, the problem is not solved as Taiwan and Vietnam still reject China's sovereignty over these 30 or so islets, sandbanks and reefs.

Prior to the 1974 war, a large portion of Paracels were under the control of then South Vietnam and neither China nor Taiwan seemed bothered about the islands, which are surrounded by rich fishing areas and potential hydrocarbon reserves.

Vietnam claims that the Paracel Islands, which are known as Hoang Sa in Vietnamese and Xisha in Mandarin, belong to it, citing its 'historical and legal evidence'.

In fact, the SCS dispute is the most complicated and complex issue involving China, Taiwan, Vietnam, the Philippines, Malaysia and Brunei Darussalam. With the growing tensions, xenophobic nationalist sentiments among claimant countries, China's growing assertiveness and fast changing power equilibrium in the region and at global level, the decades-long dispute has acquired a new dimension.

Big powers like the US, Russia and India have seen an opportunity to get a foothold in the region, claiming that China's often unilateral, and sometime provocative, actions threaten the freedom of navigation and regional peace.

The dispute, if not solved peacefully, will potentially evolve into a conflict that will threaten peace and stability in ASEAN countries as well as Asia-Pacific region.

The SCS ' known in China as the South Sea, in Vietnam as the East Sea and in the Philippines as the West Philippines Sea ' is a region rich in fisheries and hydrocarbon reserves and provides the shortest route between the Indian and western Pacific Ocean. Around US$6 trillion worth of global trade flows through this region.

The SCS has four main island groupings: the Paracel Islands (claimed by Vietnam and Taiwan but occupied by China), the Pratas Islands (claimed by China but occupied by Taiwan), the Spratly Islands (claimed by Vietnam, China and Taiwan fully and partly by Malaysia, the Philippines and Brunei but partly occupied by China, Vietnam, Taiwan, Malaysia and the Philippines) and the Macclesfield Bank/Scarborough Reef (occupied by none but both were claimed by China and Taiwan, while the Scarborough is claimed by the Philippines).

The Paracel Islands have two main groups called Amphitrite Group located in the northeast part of the islands and the Crescent Group in the western part.

As its economic weight and military might grows, China has been increasingly becoming more assertive and projecting its hard power to strengthen its claim to maritime areas and land features in both South China Sea and East China Sea.

China's recent unilateral and provocative moves like the establishment of the Air Defense Identification Zone (ADIZ) over the disputed East China Sea, imposition of new regulations on fishing in the South China Sea and a series of tests conducted by China's only aircraft carrier Liaoning in the disputed South China Sea aggravated the situation and draw ire from Vietnam, the Philippines, Japan and the US.

Even until today, Beijing, which is not a hegemonic power but assertive and aggressive when it comes to border disputes, poses a major security threat to Asia-Pacific region on the issue of volatile South China Sea.

Despite China's assertiveness and threats, Vietnam, the Philippines, Malaysia and Brunei want the SCS dispute to be solved through peaceful negotiations.

Indonesia, which is not a claimant country, wants the SCS dispute to be solved through peaceful negotiations. But the controversial Chinese nine-dash U-shaped line extends into Indonesia's exclusive economic zone and continental shelf, including the Natuna gas field.

In 1991 Indonesia took a diplomatic initiative to host a series of informal annual South China Workshop to find a modus vivendi to the SCS imbroglio. Indonesia also convinced all claimant countries to sign the historic Declaration on the Code of Conduct on the South China Sea (DOC) in 2002. Now Indonesia, through ASEAN, has been championing a legally binding Code of Conduct (COC) on the South China Sea.

ASEAN unity is also another important factor in solving the SCS problem. Putting aside their differences, ASEAN members, who are going to establish an ASEAN Community by 2015, must speak with one voice in order to achieve regional peace, stability and prosperity.